Foreign Mortgage Repayment and Exchange Rate Gain

January 2, 2019by Frontier Group
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This is an issue that is very current and which people should pay attention to, with the strength of the dollar against sterling. Americans who have non-US dollar mortgages and change the terms of their mortgage or make capital repayment on their mortgages, such transactions are deemed a taxable event for US tax purposes and may result in a taxable foreign exchange gain.

Remortgage: The US taxpayer has a mortgage moves from lender “A” to lender “B” as the mortgage rates are more beneficial.

Capital Repayment: The US taxpayer decides to pay off a lump sum of the mortgage so that they have little or no debt on their property.

In both circumstances, the following factors need to be considered from a US tax perspective:

• Value of the mortgage, in US dollars, on the date the mortgage commenced and the

• Value of the mortgage, in US dollars, at the time of the remortgage or repayment of capital is made.

Frontier Group